Isn't that exactly why Apple is using AAC and MP4, because they are open formats? Not open in the "Open Source" sense, but open in the "MP3" or "industry standard approved" sense. Much better than, say, WMA, right?
Look it up; AAC is an MPEG group standard, based on MPEG2 aac audio; implemented also in MPEG4 audio; that's why iTunes creates m4a files when you encode in AAC.
My conclusion as to why no one is competing on price; no one will make money if they do.
Apple has, more or less, applied everything it knows in cutting costs, drawn from 28 years of computer manufacturing experience.
The only people who MIGHT be able to undercut an iPod on price and still make money is Dell; but good luck on that if they're using Creative to create the Dell DJs.
As per price competition, Apple also has that licked; $99 iPod shuffle, $149 iPod shuffle, $199 iPod Nano, $249 iPod nano, $299 iPod, and $399 iPod.
Try doing a price comparison, I don't think anyone has, per gigabyte, a cheaper HD mp3 player (at least that's true in the first few months of any release). By the time it's time for a refresh, other's have caught up.
Oh, there's another reason no one is competing on price.
If you can sell a Zen for $10 less than an iPod, you still get significant profit; if you sell $50 less, you lose a lot of profit.
Given two scenarios, it seems to make more sense to, you know, make a profit?
Analogies, like humor, break down if the other party is incapable of understanding it.
"I'm only doing this because my boss told me to." "I need to do this because my job depends on it." "This is how I can afford to feed my family." "My boss knows what he's doing, so I don't need to worry about it."
What's the common thoughts and phrases uttered by the engineers of the DRM rootkit and the builders of death weapons?
Everything I've just written.
Since they are common, the analogy holds, because analogies work when there is a similarity.
Well, if there's nothing else to strip out, they can start integrating the bluetooth, firewire, 802.11, modem, and wifi all into a single chip, instead of one per.
Then you'd have: CPU + integrated memory controller GPU accessory
Why do you think the price of a "premium" computer will fall below $500 any time soon? As long as Apple can produce premium computers above $500, won't they stay that way? The real art here is in figuring out what makes a computer "premium" right?
But there is another aspect; if Apple can produce a "premium" computer below $500 (and $500 is pretty affordable) why would anyone who could afford it choose anything else? Right now Apple has a "premium" MP3 player below $500 that's wiping the floor; there are cheaper MP3 players, but no one intentionally buys cheap-people choose to buy value! If that value is fashion, performance, functionality, or price, then so be it, and at least iPods have displayed that value does not mean "cheapest mp3 player". Perhaps we will see Apple licensing the OS, but I'm not sure that's necessary as people continue to buy iPods and upgrade their PCs to Macs.
No. As I said, "if they license overnight, they'll have to sell 80m copies to make the same amount of profit. Only 177m PCs were shipped last year"
Why do you think they could successfully license to the top 3 manufacturers that sell over 50% of the systems in the world? AMD can't even get Dell to ship Opteron servers! Or Apple would have to get successfully licensed to the next 10 manufacturers that sell the remaining 50% of the systems.
If they can't do either, there's no profit incentive for Apple to license is there?
How obscure is iTunes to the PC world when: Over 30 million iPods have been sold? Mac users can't account for more than a tiny fraction of them. Over 500 million songs have been sold (roughly 20 per iPod)
Perhaps you have bad luck with iPods, but your lack of recommendation is not keeping the thing down. They're flying off the shelves.
Re:Will it cost more than a Dell running Windows?
on
Intel PowerBook Rumor Mill
·
· Score: 5, Insightful
1) Where is the profit in letting vendors sell Intel machines with Mac OS X? Right now for a $1k system they might get $100 profit. If they license OS X for $30, they might get $20 profit (being optimistic here). So if they sold $1.6b Macs last quarter, and have 10% margins (they actually have reported 9.6%), they made $160m; if they license overnight, they'll have to sell 80m copies to make the same amount of profit. Only 177m PCs were shipped last year, so they'd have to take HUGE chunks of the market in order to make a transition profitable. News article about shipment last year.
So it's not good enough that shipping OS X for Intel is cheaper; it has to be profitable. Microsoft is profitable because they got $30 or so for every PC shipped last year, or $5b in OS licenses last year.
2) Why do they want a bigger share? They only need to make more money, and that doesn't necessarily equate to bigger share. As I outlined about, $100 per PC vs $20 per PC requires an overnight 5x increase in shipment.
If Apple wants to lower prices, they still have lots of things they can do: a) strip out components: Compare a Mac mini to an XBox 360 or PS3 b) use cheaper components c) increase process efficiencies
None of those things have anything to do with adopting OS X for Intel en masse.
Well then the original poster was mistaken then. He should have said, "Step back and do it a billion times with worse margins", where volume makes up for the lower margins.
Dell sales: $13.4b Dell profits: $2.5b Apple sales: $3.6b Apple gross margin: $1b
So Dell has 18% market share to Apple's 6% (in the US at least), a 3x in sales size; this correlates surprisingly well to overall sales, where Dell is about 4x in size. Profit however is only 2.5x Apple's.
Is 2.5x the profit a lot? Yes, it is; but is it comparable given the size disparity? No. 4x the revenue, but only 2.5x the profit? Yes, Apple probably could see an increase in revenue for a slight decrease in margin; perhaps they could increase by another 3% so that instead of a 4x difference we would see a 3x difference between the two, and Apple probably would STILL maintain better margins.
Anyway, this is a tangent. The original poster was talking about how Apple overcharges, and my examples were where Taco Bell charges a huge markup, yet there is still value given to the customer, indicating they are not, in fact, over-charging.
Comparable Dell machines to Apple machines are usually only a 1.1 to 1.5 times difference; so for that difference is Apple OVER charging? I say no, Apple is charging appropriately for the value they give.
Apple has made $1.6b from it's computers and $1.2b from it's iPods. Maybe this next quarter won't see the same relationship; but we may be surprised yet again!
Just because you don't back up your software when the hardware fails; how is that different than not backing up you music(software) when your hardware(CD) fails?
Apple is not responsible for your failure to back up the music they sold you. Not one ounce. The bits over the wire, the servers on their property, that's what you are paying for when you redownload the song. Just like the rent of the Best Buy and the packaging of the CD is what you pay for when you buy a second copy of the CD.
You can't conceive that perhaps Apple isn't over-charging, but that Apple offers more value (that is consequently worth more money) than Dell?
Case in point: A soda costs $0.05 at Taco Bell. It costs you $0.99.
Yet how much value is there for you in: 1) Lugging around syrup 2) CO2 canisters 3) Mixing equipment
Myself, I drink water, but the point stands: If Apple offers more value, Apple can effectively price higher and not be over-charging.
Another example would be the $0.99 burger at Wendy's. In raw part it would cost you only $0.25 Do you want to lug around a fridge, fresh lettuce, a package of buns, a grill, ground beef, and cheese whenever you feel like eating a burger for lunch?
You pay for any number of premiums with Apple: Fashion Usability Size Performance
I bought three iPods in the last four years (sold one) because they offered superior size (at the time), superior performance (at the time), and superior usability (at the time). Fashion was a nice extra.
Or are you one of those people that always wears the same pair of jeans, sneakers, and black turtlenecks, because you know, you don't care about aesthetics?
If you step on your CD, it is Best Buy's policy to charge you for a second CD, even if you have a receipt proving you legally purchased said CD last month.
Apple's policy, however, does not prevent you from doing four things: Burn the music to a CD (something like 10 at a time; change the playlist and burn ad infinitum) Burn the file to a CD (infinite times) Copy the file to another HD (infinite times) Load the file to an iPod (infinite times)
In any event, only an act of God would wipe out your clever backups.
The model that Apple has demonstrated to it's success is threefold: 1) Software doesn't suck. The same software and interface used to interact with your own music library is the basis for the interface for their online music store. 2) Hardware that doesn't suck. The iPod 3) THe price doesn't suck. If Sony wants to charge 8, I'm willing to bet Apple will charge less ($4.99? $3.99?) for a movie.
Fairplay can be actually played on HP Media Center PCs, Motorola ROKRs and soon RAZRs, iPods, Macs, and PCs. More to the point, you can burn to a CD and play on any CD player you want; there are also numerous unlocking tools of dubious legality, but not of dubious morality.
So if Apple disappeared, no, the music would not die; you would still have your iPod, still have your iTunes, still have your CD player, etc.
The reason Fairplay is superior is that it was the first that allowed you to: 1) Connect a song from a PC to an MP3 player without extra charges 2) Burn said song to a CD any number of times, with a few constraints 3) Make as many copies of the file as you want
If the other DRM have caught up, it isn't because Fairplay isn't superior; it's because it is, and the others adopted Fairplay's design.
Considering that AAC is an mpeg format, it is really the logical successor to mp3; that everyone is creating wma + mp3 players and Apple seems to be the only major purveyor of AAC seems downright backwards. AAC is MPEG; as much as DivX or XviD or MP3 is MPEG.
WMA is the proprietary interface; AAC is the industry standard (both in theory as well as in practice)
Slashdot Mirror
AAC you buys is DRM protected; AAC you rip with iTunes is not.
So comparing AAC to WMA, the point STILL stands that AAC is an open industry standard, like MP3, while WMA is not.
It seems to me that what Apple did was add a feature your player doesn't support:
They exported the database from the MP3 player onto the computer.
My database is on both my computer AND my mp3 player.
Your database can only be found on your mp3 player; you have to manually organize the music on your computer.
Isn't that exactly why Apple is using AAC and MP4, because they are open formats? Not open in the "Open Source" sense, but open in the "MP3" or "industry standard approved" sense. Much better than, say, WMA, right?
Look it up; AAC is an MPEG group standard, based on MPEG2 aac audio; implemented also in MPEG4 audio; that's why iTunes creates m4a files when you encode in AAC.
My conclusion as to why no one is competing on price; no one will make money if they do.
Apple has, more or less, applied everything it knows in cutting costs, drawn from 28 years of computer manufacturing experience.
The only people who MIGHT be able to undercut an iPod on price and still make money is Dell; but good luck on that if they're using Creative to create the Dell DJs.
As per price competition, Apple also has that licked; $99 iPod shuffle, $149 iPod shuffle, $199 iPod Nano, $249 iPod nano, $299 iPod, and $399 iPod.
Try doing a price comparison, I don't think anyone has, per gigabyte, a cheaper HD mp3 player (at least that's true in the first few months of any release). By the time it's time for a refresh, other's have caught up.
Oh, there's another reason no one is competing on price.
If you can sell a Zen for $10 less than an iPod, you still get significant profit; if you sell $50 less, you lose a lot of profit.
Given two scenarios, it seems to make more sense to, you know, make a profit?
Analogies, like humor, break down if the other party is incapable of understanding it.
"I'm only doing this because my boss told me to."
"I need to do this because my job depends on it."
"This is how I can afford to feed my family."
"My boss knows what he's doing, so I don't need to worry about it."
What's the common thoughts and phrases uttered by the engineers of the DRM rootkit and the builders of death weapons?
Everything I've just written.
Since they are common, the analogy holds, because analogies work when there is a similarity.
Well, if there's nothing else to strip out, they can start integrating the bluetooth, firewire, 802.11, modem, and wifi all into a single chip, instead of one per.
Then you'd have:
CPU + integrated memory controller
GPU
accessory
All on the motherboard.
Why do you think the price of a "premium" computer will fall below $500 any time soon? As long as Apple can produce premium computers above $500, won't they stay that way? The real art here is in figuring out what makes a computer "premium" right?
But there is another aspect; if Apple can produce a "premium" computer below $500 (and $500 is pretty affordable) why would anyone who could afford it choose anything else? Right now Apple has a "premium" MP3 player below $500 that's wiping the floor; there are cheaper MP3 players, but no one intentionally buys cheap-people choose to buy value! If that value is fashion, performance, functionality, or price, then so be it, and at least iPods have displayed that value does not mean "cheapest mp3 player". Perhaps we will see Apple licensing the OS, but I'm not sure that's necessary as people continue to buy iPods and upgrade their PCs to Macs.
No. As I said, "if they license overnight, they'll have to sell 80m copies to make the same amount of profit. Only 177m PCs were shipped last year"
Why do you think they could successfully license to the top 3 manufacturers that sell over 50% of the systems in the world? AMD can't even get Dell to ship Opteron servers! Or Apple would have to get successfully licensed to the next 10 manufacturers that sell the remaining 50% of the systems.
If they can't do either, there's no profit incentive for Apple to license is there?
How obscure is iTunes to the PC world when:
Over 30 million iPods have been sold? Mac users can't account for more than a tiny fraction of them.
Over 500 million songs have been sold (roughly 20 per iPod)
Perhaps you have bad luck with iPods, but your lack of recommendation is not keeping the thing down. They're flying off the shelves.
1) Where is the profit in letting vendors sell Intel machines with Mac OS X?
Right now for a $1k system they might get $100 profit. If they license OS X for $30, they might get $20 profit (being optimistic here). So if they sold $1.6b Macs last quarter, and have 10% margins (they actually have reported 9.6%), they made $160m; if they license overnight, they'll have to sell 80m copies to make the same amount of profit. Only 177m PCs were shipped last year, so they'd have to take HUGE chunks of the market in order to make a transition profitable.
News article about shipment last year.
So it's not good enough that shipping OS X for Intel is cheaper; it has to be profitable. Microsoft is profitable because they got $30 or so for every PC shipped last year, or $5b in OS licenses last year.
2) Why do they want a bigger share? They only need to make more money, and that doesn't necessarily equate to bigger share. As I outlined about, $100 per PC vs $20 per PC requires an overnight 5x increase in shipment.
If Apple wants to lower prices, they still have lots of things they can do:
a) strip out components: Compare a Mac mini to an XBox 360 or PS3
b) use cheaper components
c) increase process efficiencies
None of those things have anything to do with adopting OS X for Intel en masse.
The missing skillset for the purchaser in question to perform the upgrade in the first place.
It's why most people in the market for automatic cars don't buy a stick and 'upgrade' it to an automatic.
Just like there are people who upgrade the speakers and sound systems on their otherwise stock cars.
Third party developers don't make Apple any money. Why do they "need more users using OS X so they can attract 3rd party developers"?
What Apple needs is to make their computers "valuable" enough for people to purchase them despite a 15% price difference.
My appl stock would go up so much if people actually did think like that regarding Apple Macintoshes.
Unfortunately they don't.
Nope. It's already been demonstrated that Apple will open up iTMS without Sony if Sony cannot agree to "reasonable" arrangements.
So no Spiderman online if Sony won't meet everyone midway. I mean, you know that Apple opened in Japan and Australia without Sony, right?
Well then the original poster was mistaken then. He should have said, "Step back and do it a billion times with worse margins", where volume makes up for the lower margins.
I'm saying that because your ownership of the song that comes packaged on a CD expires because of some calamity, such as stepping on the CD.
Why are the bits on a CD different than the bits on a harddrive?
Dell from July, Apple from September
Dell sales: $13.4b
Dell profits: $2.5b
Apple sales: $3.6b
Apple gross margin: $1b
So Dell has 18% market share to Apple's 6% (in the US at least), a 3x in sales size; this correlates surprisingly well to overall sales, where Dell is about 4x in size. Profit however is only 2.5x Apple's.
Is 2.5x the profit a lot? Yes, it is; but is it comparable given the size disparity? No. 4x the revenue, but only 2.5x the profit? Yes, Apple probably could see an increase in revenue for a slight decrease in margin; perhaps they could increase by another 3% so that instead of a 4x difference we would see a 3x difference between the two, and Apple probably would STILL maintain better margins.
Anyway, this is a tangent. The original poster was talking about how Apple overcharges, and my examples were where Taco Bell charges a huge markup, yet there is still value given to the customer, indicating they are not, in fact, over-charging.
Comparable Dell machines to Apple machines are usually only a 1.1 to 1.5 times difference; so for that difference is Apple OVER charging? I say no, Apple is charging appropriately for the value they give.
I thought 6% was worse than 9% margins. Where do you get "better margins" the Dell way?
Financial data
Apple has made $1.6b from it's computers and $1.2b from it's iPods. Maybe this next quarter won't see the same relationship; but we may be surprised yet again!
How is it different?
Just because you don't back up your software when the hardware fails; how is that different than not backing up you music(software) when your hardware(CD) fails?
Apple is not responsible for your failure to back up the music they sold you. Not one ounce. The bits over the wire, the servers on their property, that's what you are paying for when you redownload the song. Just like the rent of the Best Buy and the packaging of the CD is what you pay for when you buy a second copy of the CD.
Financial Data
Which is why Apple made $1.6b in computers and $1.2b in iPods right?
You can't conceive that perhaps Apple isn't over-charging, but that Apple offers more value (that is consequently worth more money) than Dell?
Case in point: A soda costs $0.05 at Taco Bell. It costs you $0.99.
Yet how much value is there for you in:
1) Lugging around syrup
2) CO2 canisters
3) Mixing equipment
Myself, I drink water, but the point stands: If Apple offers more value, Apple can effectively price higher and not be over-charging.
Another example would be the $0.99 burger at Wendy's. In raw part it would cost you only $0.25
Do you want to lug around a fridge, fresh lettuce, a package of buns, a grill, ground beef, and cheese whenever you feel like eating a burger for lunch?
You pay for any number of premiums with Apple:
Fashion
Usability
Size
Performance
I bought three iPods in the last four years (sold one) because they offered superior size (at the time), superior performance (at the time), and superior usability (at the time). Fashion was a nice extra.
Or are you one of those people that always wears the same pair of jeans, sneakers, and black turtlenecks, because you know, you don't care about aesthetics?
If you step on your CD, it is Best Buy's policy to charge you for a second CD, even if you have a receipt proving you legally purchased said CD last month.
Apple's policy, however, does not prevent you from doing four things:
Burn the music to a CD (something like 10 at a time; change the playlist and burn ad infinitum)
Burn the file to a CD (infinite times)
Copy the file to another HD (infinite times)
Load the file to an iPod (infinite times)
In any event, only an act of God would wipe out your clever backups.
The model that Apple has demonstrated to it's success is threefold:
1) Software doesn't suck. The same software and interface used to interact with your own music library is the basis for the interface for their online music store.
2) Hardware that doesn't suck. The iPod
3) THe price doesn't suck. If Sony wants to charge 8, I'm willing to bet Apple will charge less ($4.99? $3.99?) for a movie.
Fairplay can be actually played on HP Media Center PCs, Motorola ROKRs and soon RAZRs, iPods, Macs, and PCs. More to the point, you can burn to a CD and play on any CD player you want; there are also numerous unlocking tools of dubious legality, but not of dubious morality.
So if Apple disappeared, no, the music would not die; you would still have your iPod, still have your iTunes, still have your CD player, etc.
The reason Fairplay is superior is that it was the first that allowed you to:
1) Connect a song from a PC to an MP3 player without extra charges
2) Burn said song to a CD any number of times, with a few constraints
3) Make as many copies of the file as you want
If the other DRM have caught up, it isn't because Fairplay isn't superior; it's because it is, and the others adopted Fairplay's design.
Considering that AAC is an mpeg format, it is really the logical successor to mp3; that everyone is creating wma + mp3 players and Apple seems to be the only major purveyor of AAC seems downright backwards. AAC is MPEG; as much as DivX or XviD or MP3 is MPEG.
WMA is the proprietary interface; AAC is the industry standard (both in theory as well as in practice)